China’s central bank is rolling out a new framework for the digital yuan that will allow commercial banks to pay interest on e-CNY wallet balances starting Jan. 1, 2026, a move officials say will push the central bank digital currency (CBDC) beyond its original role as a cash substitute.
The new CBDC framework will allow banks to treat the digital yuan as part of their asset-liability operations, Lu Lei, a deputy governor of the People’s Bank of China, wrote in a PBOC-affiliated China Financial News article, republished by Sina Finance on Monday.
“The digital RMB will move from the digital cash era to the digital deposit currency (Digital Deposit Money) era,” said Lei in the report. “It has the functions of monetary value scale, value storage, and cross-border payment.”
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While cryptocurrency transactions and stablecoins are banned in Mainland China, the PBOC continues developing its CBDC framework, seeking to utilize the efficiency of blockchain rails through a central-bank-issued digital cash alternative.
This is in stark contrast to the stablecoin-friendly US regime, where President Donald Trump issued an executive order banning the creation of a CBDC, citing concerns over their potential to threaten financial system stability, individual privacy, and national sovereignty.
The executive order, signed on Jan. 23, prohibits the establishment, issuance, circulation, or use of CBDCs, a development described as a “game-changer” for the growth of the US crypto industry, Anndy Lian, an author and intergovernmental blockchain adviser, previously told Cointelegraph.
In July, Trump signed the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, the US’s first comprehensive stablecoin framework, which established clear rules for stablecoin collateralization and mandated compliance with Anti-Money Laundering laws.
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China’s “Action Plan” to accelerate e-CNY adoption
The new framework, the “Action Plan on Further Strengthening the Digital RMB Management Service System and Related Financial Infrastructure Construction,” seeks to expand the national use of the e-CNY and build the necessary infrastructure.
In September, the central bank established the RMB International Operations Center in Shanghai, a blockchain services platform seeking to build onchain settlement tools and crosschain transfer capabilities to promote the use of digital yuan stablecoins.
While the PBOC said that the digital yuan could create more financial inclusion, some critics are concerned about the digital yuan’s ability to offer more financial control to the central bank.
“The Chinese government wants more control over payments,” according to Alex Gladstein, chief strategy officer at non-profit organization the Human Rights Foundation.
While the central bank already holds a “firm grip” on the two leading commercial payment giants, direct control and oversight over a digital currency would provide more data and “power to deny people access,” Gladstein told MIT Technology Review in August 2023.
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